Dive Brief:
- A federal jury awarded $45 million to Kiewit Power Constructors in a dispute about construction delays at a Los Angeles Department of Water and Power project in Playa Del Ray, according to the Los Angeles Times. The jury also awarded the department $1 million on its counterclaim that Kiewit did not live up to the terms of its $440 million contract.
- Kiewit claimed that it racked up $49 million in extra charges after making repairs to equipment damaged in transit to the job and waiting on late deliveries from a manufacturer in Korea. Meanwhile, the department claimed that Kiewit was behind schedule before the equipment delay and that it delivered a "lemon," resulting in potentially more than $150 million of damages.
- The water department also sued vendor General Electric, alleging that the equipment in question was delayed or damaged at sea due to GE's "breach of contract and negligence." The utility settled with GE, recovering $19 million, which officials said will help offset what the department has to pay Kiewit. Officials also said that any amount paid to Kiewit would not financially impact customers.
Dive Insight:
Going to court with an owner is often an extreme step for contractors, who sometimes agree to arbitration instead, possibly after attempts at mediation have failed. However, despite the different name, the arbitration process bears a strong resemblance to a trial, complete with discovery, depositions, live evidence and a decision by either a panel of arbitrators or just one.
Arbitration also can be just as expensive as a going to trial, if not more, because both parties have to pay attorney and arbitrators. And, there's an additional step in arbitration that comes after an award is made, Quinn Murphy, attorney at Sandberg and Phoenix in St. Louis, Missouri, told Construction Dive — that is going to court in order to register the judgment.
The best option is not to have a dispute in the first place, and some are touting more collaborative project delivery methods as the solution. For example, as part of integrated project delivery, principals from the design and engineering teams, plus the general contractor and oftentimes major subs, sit down together and hammer out any design issues or foreseeable challenges — like when to order items with long lead times — before the project begins. This can eliminate, or at least reduce, costly change orders, design flaws and misunderstandings that end up in the courtroom.
